Are Canadians being "hood winked" on music piracy?

[Frankie3s]

A report that came out this week mentions that online music purchases have increased 60% over last year,

"Nielsen SoundScan Canada reported that just over 40 million digital tracks were sold on digital music services like iTunes in 2008, up 60% from a year earlier."

While purchasing of physical CD's fell 14%,

"At the same time, total album sales fell 14% last year to 36 million units, compared with 41.8 million units in 2007."

http://www.hollywoodreporter.com/hr/content_display/world/news/e3i4d62455821370cfb55064e3d0a0c3f36

Isn't this to be expected with new media technologies such as the iPod and other music players? Then wouldn't it be logical for the old media (CDs, Records and Tapes) to continue to fall in popularity as other more convenient ways of acquiring music (iTunes, Rhapsody) become available?

If someone owns an iPod, why on earth would they want to go and buy a CD when they can for the same price, buy the album on line and download it directly into their music player? So why are CD sales still being mentioned? That's like still reporting on the sales of records and tapes and saying "see, people are not buying these anymore so they must be pirating them" when evidence is clearly showing that new media sales are strong with a growth of 60% in 2008.

[SAN66]

They release these figures to track the transition from physical media sales to virtual media sales.

The more important figure to them is the 14% drop in total sales (regardless of media). This can be partly attributed to people picking and choosing their tracks. With CDs if you really liked a song, you would buy it and be stuck with some less favourable tracks you may not like, with MP3's you can just buy that one track and ignore other tracks you don't like. Still, thats probably a small part of the 14%, piracy takes the bulk of that 14% drop.

[thechampion116]

They release these figures to track the transition from physical media sales to virtual media sales.

The more important figure to them is the 14% drop in total sales (regardless of media). This can be partly attributed to people picking and choosing their tracks. With CDs if you really liked a song, you would buy it and be stuck with some less favourable tracks you may not like, with MP3's you can just buy that one track and ignore other tracks you don't like. Still, thats probably a small part of the 14%, piracy takes the bulk of that 14% drop.

agreed.

I don't buy CD's for the sheer fact that I may only be interested in only 1/2 the songs on the album and could care less for the rest of it.

There will still be a niche for CD's though, even when digital media takes over the music industry completely. CD's provide a physical media for people to collect.

[Super strokey]

I wonder if this includes things like rockband sales?

[sfu_lifer]

I wonder if this includes things like rockband sales?
I doubt it but it would be good if they did include it since Rock Band tracks sell like mad.
People in the digital age is all about instant gratification. I know if I hear a nice song on the radio, I tag it on my Zune and download later.

[darksith31]

I doubt it but it would be good if they did include it since Rock Band tracks sell like mad.
People in the digital age is all about instant gratification. I know if I hear a nice song on the radio, I tag it on my Zune and download later.

YAY!! Another Zune user! Add me to your friends list (mine is salamahoy).

[rilhouse]

If someone owns an iPod, why on earth would they want to go and buy a CD when they can for the same price, buy the album on line and download it directly into their music player?

there are many reasons to buy CDs:

- artwork
- have a physical copy of the media
- not compressed and you can encode to what ever format you want
- DRM free (for the most part) although iTunes is moving to DRM free anyway

i personally don't buy CDs but i know many people you have PMPs that still do. there will always be a market for physical media.

[rabbit]

> If someone owns an iPod, why on earth would they want to go and buy a CD when they can for the same price, buy the album on line and download it directly into their music player?

Because lossy format sucks the dong, and nobody should be paying money for it ... well, maybe if it were 25c ... definitely not a dollar.


> So why are CD sales still being mentioned? That's like still reporting on the sales of records and tapes and saying "see, people are not buying these anymore so they must be pirating them" when evidence is clearly showing that new media sales are strong with a growth of 60% in 2008.

Because CD still outsells everything else. If you sell 100 tracks a year, it's not difficult to grow to 160 tracks the next year. You have to take the actual units into consideration.



> I wonder if this includes things like rockband sales?

What isn't being included are things like concert ticket sales, where prices have skyrocketed, and souvenirs sold at concerts (t-shirts, etc). I'm sure used CD/vinyl sales have never been included, either.


PS. You're fooling yourself if you don't think piracy isn't hurting music sales.

[Madchester]

[i]>

PS. You're fooling yourself if you don't think piracy isn't hurting music sales.

Actually....

http://www.economist.com/business/displaystory.cfm?story_id=9443082

I've posted this article multiple times before.... but some people still miss the message that musicians are moving away from a CD/album based system and towards concert-driven revenue. The album to concert revenue split has gradually changed places over this decade.

People's preferences are just changing so that they'd rather pay for live music, than the recorded medium. Even with all the recession worries, Pollstar reported that 2008 US concert grosses exceeded that of 2007. Meanwhile, domestic film grosses fell year-to-year.

As the Warner Records exec told his shareholders: "The music industry is growing.... the record industry is not growing."

[rabbit]

I meant 'music sales' as in sales of music/songs, and everyone should know this. How do you pirate going to a concert? Fake tickets? I don't think those work too well. Fake t-shirts? Okay, this is possible.


> People's preferences are just changing so that they'd rather pay for live music, than the recorded medium.

I'm sure people would rather not pay for either, but since it's nearly infinitely easier to get music for free than it is to get into a concert for free ...



> Even with all the recession worries, Pollstar reported that 2008 US concert grosses exceeded that of 2007.
+
> As the Warner Records exec told his shareholders: "The music industry is growing.... the record industry is not growing."

But what are the actual number of people going to the concerts now compared to ten or twenty years ago? If it costs $100 to buy a ticket now, when $50 could have gotten you a ticket + album back then, sure, concert grosses are going to look pretty good these days. And I think the main reason why tickets are so expensive now is to make up for lost album sales due to pirating.

[Madchester]

How do you pirate going to a concert?


Bootleg concert trading. I need to re-activate my Dime a Dozen account. Whereas a record label may only release one live DVD or album for a tour, with popular taping bands like Radiohead you can get an entire catalogue of their tour performances online. This is especially useful for hearing/watching rarities and new material that haven't been relased by the recording label. It also lets you hear historical performances from bands who have disbanded; i.e., Pink Floyd playing DSOTM in full, while road-testing a full rendition of Animals on the same show.

Obviously this is an imperfect substitute to the live experience, but the wealth of online bootlegs (including the wealth of amateur Youtube concert videos) has made nary a dent in concert revenues. In term of utility-maximization and consumer surplus, consumers get (or feel they get) better value for their money with concerts than recorded music, even when there's a mark up premium in the former.

It's no different than the coffee price phenomenon (see Tim Harford, "Trust Me I'm an Economist" on the BBC... Dan Ariely of "Predictably Irrational", etc.) where the price of coffee has sky-rocketed in recent years, even though the actual cost of coffee hasn't. It's just that the producer (Starbucks and co. for coffee, Live Nation and co. for concerts) have recognized that consumers are willing to pay more for greater (perceived) value in their purchase. Obviously there's some price point where consumers will shy away from the product, but the producers have done a good job in evaluating consumer preferences, and thus their prices.

The recording industry, on the other hand, have done a tripe job in evaluating consumer preferences and value for their product, hence their declining fortunes in recent years. They've tried many gimmicks in increasing the value of a CD, whether it's interactive content, bonus DVD footage, etc. but they're just losing touch with the general public.

If you're interested in learning more about this shift to a concert-driven music industry, read up on the recent 360 artist deals, especially those given by Live Nation. The company's laughing it's way to the bank whereas the record labels still haven't got a clue.

[rabbit]

> In term of utility-maximization and consumer surplus, consumers get (or feel they get) better value for their money with concerts than recorded music, even when there's a mark up premium in the former.

They don't get better value with concerts when downloading/pirating music is free. Make concerts free, and then see which people prefer: music or concerts.

What do you think people prefer to download, studio albums or live bootlegs?

edit// You're comparing buying a CD to going to a concert, which I think it wrong.
My comparison is:
1) buy a CD = have less money for other things, or
2) pirate music = have money for other things, such as go to concerts.


Anyhow, this is getting off topic. The answer to the original question is: no. I'm sure lots of people are not paying for music that they would have if they could not get it for free. However, music labels do exaggerate the problem.

[Super strokey]

Ill pay more than a few pennies to see a concert of a band i want to see (over 100 bucks for iron maiden and it was sooooo worth it). But I sure wont pay for a ****** CD.

I thikn its a load of crap the way the music industry is complaining. They are making ******** amounts of money already and because they refuse to embrace the way things are changing.

Things we know that arnt included in their "we are so poor but still make millions numbers"

Rockband sales (which are high and not at all cheap)
Concert sales (which are way way up and tickets are not cheap)
Band related stuff like memorabilia (which again, is up for current and older bands)

[Madchester]

They don't get better value with concerts when downloading/pirating music is free. Make concerts free, and then see which people prefer: music or concerts.



Ill pay more than a few pennies to see a concert of a band i want to see (over 100 bucks for iron maiden and it was sooooo worth it). But I sure wont pay for a ****** CD.


i.e., the absolute and marginal utility for a concert is greater than that for a recorded album. Even if both were free, people would prefer the live experience over the recorded one. Likewise, if you had a $200 budget on "music" per year, then you'd still choose the concerts over the CD, since the consumer perceives more value/utility in the former than the latter.

It's really economics 101. The full Economist article expanded on the topic more thoroughly. It noted how artists used to have tours as a promotional vehicle for their album releases. Today, with consumers assigning so little value to recorded music, it's become the promotional tool supporting a concert tour.

[Eternia]

there are many reasons to buy CDs:

- artwork
- have a physical copy of the media
- not compressed and you can encode to what ever format you want
- DRM free (for the most part) although iTunes is moving to DRM free anyway

i personally don't buy CDs but i know many people you have PMPs that still do. there will always be a market for physical media.
Yup, I'd still buy CDs for the right price. Either it's usually cheaper than buying each track individually or I can't find it elsewhere. Physical copy is a plus. Need that Canadian dollar to go up though !

[Spare-Flair]

Yahoo Music Unlimited which bought Shoutcast was shut down this year because Yahoo wasn't making enough money. They moved their customers to Rhapsody. Canadian customers were cut off. Rhapsody doesn't offer any services to Canadians. Napster Free also doesn't offer services to Canada.

Basically the Canadians have little choice in online music services other than itunes. It's ********.

[FerrisB]

This can be partly attributed to people picking and choosing their tracks. With CDs if you really liked a song, you would buy it and be stuck with some less favourable tracks you may not like, with MP3's you can just buy that one track and ignore other tracks you don't like. Still, thats probably a small part of the 14%, piracy takes the bulk of that 14% drop.


I'm really torn on this. One of the great things about tapes and CD's were those extra songs. I know there are MANY songs and albums that I grew to love after a few listens because I just threw it in the stereo and hit play. Like Smashing Pumpkins-Siamese Dream and Radiohead-Pablo Honey. I grew to love almost all the songs on those albums, but I bought them for only one or two. There are a few CD's now that I consider soundtracks to my highschool years.

The next generation no longer gets the 'album experience'.

[rabbit]

> i.e., the absolute and marginal utility for a concert is greater than that for a recorded album. Even if both were free, people would prefer the live experience over the recorded one. Likewise, if you had a $200 budget on "music" per year, then you'd still choose the concerts over the CD, since the consumer perceives more value/utility in the former than the latter.

When you see a concert, you see it once and then it's over. With a CD, you can choose to replay it whenever you want, as often as you want, pretty much wherever you want.

It's not the same, but the cinema experience or the DVD?




> Basically the Canadians have little choice in online music services other than itunes. It's ********.

Check out some of the links at http://www.chebucto.ns.ca/~rakerman/digimusic.html
It's a bit outdated, though. If you like techno, try http://www.beatport.com (lots of cool, uncommercial shizz there).

[angekfire]

Buying CDs and iTunes songs is great if you want to support the record industry, and give a tiny portion to the band that produced the music you love. If you really want to support the band, they make the majority of their revenue from Concerts & Merch sales at concerts. Quite frankly, I'd rather give money to the band than the record company. I'll still buy the CD though if I really like the band.

[Madchester]

When you see a concert, you see it once and then it's over. With a CD, you can choose to replay it whenever you want, as often as you want, pretty much wherever you want.



Utility is the value not the time derived from the item. Most economic studies comparing concert and CD/recorded music have found that the former has much greater absolute and marginal utility than the latter.

Putting it simply, say you see 5 concerts a year and also purchase 20 CDs a year. The 5 concerts you see have much greater absolute utility than the CDs purchased. Likewise, the additional utility derived from the 5th concert attended is much higher than that of the 20th CD purchased.. let alone the 15th or 10th one purchased.

If the record labels want to survive they should examine how the bottled water industry is making a fortune out of a similarly ubiquitous product.

[Spongeg]

i still buy CD's - not as many as I used to but I rip em and store em and listen to them on whatever

I just like getting the "package" plus its hjard to find some music these days and without a credit card buying muisc online is too complicated

[limpid]

Buying CDs and iTunes songs is great if you want to support the record industry, and give a tiny portion to the band that produced the music you love. If you really want to support the band, they make the majority of their revenue from Concerts & Merch sales at concerts. Quite frankly, I'd rather give money to the band than the record company. I'll still buy the CD though if I really like the band.

I am not nailing you nor am I defending the record industry when I say if it were not for them, people like you or me would have never found out about that band... nor would the band/performer got rich. Regardless of what people will talk about a performer will tell you the industry mixed with their new riches is still the more likable way.

[Spongeg]

it amazes me how AC/DC managed to sell over 10 million copies of their last album in about 2 or 3 months - they release the same album every few years and make a mint

[limpid]

it amazes me how AC/DC managed to sell over 10 million copies of their last album in about 2 or 3 months - they release the same album every few years and make a mint

It's a strong brand which is mostly supported by adults in their 30-60's which fathers/uncles a newer generation who buys in out of respect to the adult/create common interest.

[angekfire]

I am not nailing you nor am I defending the record industry when I say if it were not for them, people like you or me would have never found out about that band... nor would the band/performer got rich. Regardless of what people will talk about a performer will tell you the industry mixed with their new riches is still the more likable way.

I wouldn't say that is entirely accurate. I don't listen to the radio and I don't watch TV, so the bands I listen to I am not hearing because of advertisements or because they are playing on the radio or are popular. I find most of the bands I listen to on myspace, which they can have without a record deal. Generally, I go to a page of a band I like and check out other bands who are their friends, and if I like their music, I check out their friends and so on. So I find all kinds of bands, whether they are signed to a label or just starting out and only have 2-3 tracks recorded in their garage.

[rabbit]

> Utility is the value not the time derived from the item. Most economic studies comparing concert and CD/recorded music have found that the former has much greater absolute and marginal utility than the latter.

I would guess that a high majority of the people go to concerts after they hear the CD and get to love the music, not the other way around. If your argument were true, concert figures would have always been better than CD/vinyl/etc sales.

Besides, trying to quantify value in music is absurd. If I don't like a song, but someone else does, is the song good value or bad value?

[Madchester]

trying to quantify value in music is absurd. If I don't like a song, but someone else does, is the song good value or bad value?

You do realize that the record labels and touring companies have been evaluating how consumers value their products in order to set proper price points? With iTunes launching a price-discriminating platform, it's giving the labels the ability to classify different pricing tiers for tracks at their discretion. (http://www.engadget.com/2009/01/06/itunes-going-primarily-drm-free/) "Discretion" being the way that consumers value a song as thus how Apple can charge them for it.

The crux of your argument is that CDs are "better value" that concerts.

Let's assume people are rational and by extension markets, with their producers and consumers are rational.

If producers knew that consumers derive more utility from CDs than concerts, then the rational action is to have CDs priced higher than concerts. Producers are profit-maximizing and it would make sense to charge consumers more for a highly-desired product.

But as we know in real life, that's not the case as CDs are generally priced lower than a concert ticket. Now either your argument is flawed, or people are irrational - I'd hope for the world's sake that it's the former.

[oliverstwist]

you do realize that the record labels and touring companies have been evaluating how consumers value their products in order to set proper price points? With itunes launching a price-discriminating platform, it's giving the labels the ability to classify different pricing tiers for tracks at their discretion. (http://www.engadget.com/2009/01/06/itunes-going-primarily-drm-free/) "discretion" being the way that consumers value a song as thus how apple can charge them for it.

The crux of your argument is that cds are "better value" that concerts.

Let's assume people are rational and by extension markets, with their producers and consumers are rational.

If producers knew that consumers derive more utility from cds than concerts, then the rational action is to have cds priced higher than concerts. Producers are profit-maximizing and it would make sense to charge consumers more for a highly-desired product.

But as we know in real life, that's not the case as cds are generally priced lower than a concert ticket. Now either your argument is flawed, or people are irrational - i'd hope for the world's sake that it's the former.

+1

[ricoboxing]

back in the days, i use to go to HMV buy a CD or cassette, get my CD card stamped, go home dub the cd to my cassette, then return it for a refund.

had to do this ten times to get my free cd though.

[Super strokey]

back in the days, i use to go to HMV buy a CD or cassette, get my CD card stamped, go home dub the cd to my cassette, then return it for a refund.

had to do this ten times to get my free cd though.

Thats pretty lame man...

[FerrisB]

back in the days, i use to go to HMV buy a CD or cassette, get my CD card stamped, go home dub the cd to my cassette, then return it for a refund.

had to do this ten times to get my free cd though.

weak. You're the reason honest people get screwed when stores are forced to tighten their return policies.

[ricoboxing]

weak. You're the reason honest people get screwed when stores are forced to tighten their return policies.

agree, but i was only 16 at the time and didnt know better

[zod]

You'd think the RIAA would try and go back to album format to spur sales. For years they've been putting out crappy music, alot of one hit wonders. With Itunes, people can just buy that one song now. Thats got to be hurting the RIAA's pockets. You'd think somewhere in there, they'd be think about signing talented bands, who can do a full quality album. I also feel sorry for new artists. It used to be the record companies took their cut from the cd's (I think it used to be that bands only recieved around a buck and album). Now that those sales are low, they're taking a cut of concert revenues. Concert revenues used to be where the good money was at for bands. The older established acts don't need to sign crappy contracts like that, but the new ones do. I'm surprise they don't form a union or their own organization and cut out the middleman, what do they really need the RIAA for anyways.

[Vashin]

If producers knew that consumers derive more utility from CDs than concerts, then the rational action is to have CDs priced higher than concerts. Producers are profit-maximizing and it would make sense to charge consumers more for a highly-desired product.

But as we know in real life, that's not the case as CDs are generally priced lower than a concert ticket. Now either your argument is flawed, or people are irrational - I'd hope for the world's sake that it's the former.

lol wtf are you talking about. You can't just compare prices and saying because price of x is higher than y, x must have higher utility than y. Its like saying ketchup is more expensive than mustard therefore ketchup must give higher utility than mustard. Priced is derived as a function of supply and demand.

[bmnb4tches]

You do realize that the record labels and touring companies have been evaluating how consumers value their products in order to set proper price points? With iTunes launching a price-discriminating platform, it's giving the labels the ability to classify different pricing tiers for tracks at their discretion. (http://www.engadget.com/2009/01/06/itunes-going-primarily-drm-free/) "Discretion" being the way that consumers value a song as thus how Apple can charge them for it.

The crux of your argument is that CDs are "better value" that concerts.

Let's assume people are rational and by extension markets, with their producers and consumers are rational.

If producers knew that consumers derive more utility from CDs than concerts, then the rational action is to have CDs priced higher than concerts. Producers are profit-maximizing and it would make sense to charge consumers more for a highly-desired product.

But as we know in real life, that's not the case as CDs are generally priced lower than a concert ticket. Now either your argument is flawed, or people are irrational - I'd hope for the world's sake that it's the former.

+2

if you throw in the supply and dremand arguments from above, it just further reinforces how concerts are more highly valued than cds.


back in the days, i use to go to HMV buy a CD or cassette, get my CD card stamped, go home dub the cd to my cassette, then return it for a refund.

had to do this ten times to get my free cd though.

around 2000/1 the HMV, Sam's and co changed their cd refund policies, since cd ripping software began to go mainstream. HMV held out for the longest time, and some people abused their lax policy to buy a dozen cds, rip them all at home and exchanged them for another dozen cds over and over again.